Mozilla Corp. in 12 simple items

because MozFo probably makes too much revenue for a
non-profit organization, and that may become a serious legal problem

because corporations (partners, embeddors, ...) and
potential hires prefer dealing with a corporation rather than with a
non-profit, they just don't understand/trust non-profit; that's why
"Mozilla Corporation" name is perfectly adequate.

because it can trigger new revenue streams

Cons:

taxes, so less revenue immediately for the foundation, but
that was not an option, see Why-1 above

no stocks, no shares, no IPO, products remain free, income
is 100% shared, boards to control everything

same people, same spirit, same goatsgoals

Open questions AFAIC:

it's not clear at all who's responsible for evangelism. Or
even marketing. MozFo or MozCo? MozFo is responsible for promoting
blahblah but MozCo has to productize branded tools based on Mozilla

how will third-party tools like Nvu go back to Mozilla?
That implies resources for builds for instance. Will MozCo provide the
community with support for non-productized-mozilla-based-tools like
MozFo did in the past, and with same commitment?

MozFo will probably be rapidly understaffed. What are the
hiring plans on both MozFo and MozCo sides?

I think this change was absolutely necessary, and I
remember advocating in favor of that change during a chat with Tristan
Nitot back in september 2003 when MozFo was only a two months old baby.
The rationale behind was already summarizable by the three Why items
above.

Let's go further: Mozilla Foundation's international
affiliates should probably do the same in order to be able to deal with
corporations wishing to support Firefox/Thunderbird local deployment,
for instance providing technical support to local companies switching
to mozilla products. The resulting revenue stream could ensure the
survival of the affiliates without financial perfusion from the Mozilla
Foundation, but will probaly push those organizations too close to the
edge of their non-profit status. Hence the need for commercial subsidiaries.

Updates: (a) important disclaimer, the 12 points above represent what I understand from this change and where I think this organizational change is helpful. I was not involved at all in the decision or setup of this new organization, and my opinions above should not be seen as representative of MozFo or MozCo in any way. I wrote this article alone, never intended to make something complementary to the official PR or FAQ released by MozFo/MozCo. As usual, I am representing here only myself. (b) Franck Hecker has posted an interesting and long comment to this article.

Comments

Some quick comments on the various comments you make and questions you raise:

Why 1: I am not a tax lawyer (insert standard disclaimer), but my personal understanding is that the issue with revenue is not the amount of revenue, but rather the type of revenue. If an organization raises money in ways similar to those that might be used by a traditional for-profit corporation, and performs similar functions to what a traditional for-profit might do, then it makes sense to use an organizational framework more like a traditional corporation than a tax-exempt nonprofit organization.

However to my knowledge nothing prevents the Mozilla Foundation from raising as much revenue as it can through donations and related means associated with tax-exempt nonprofit organizations. The Mozilla Foundation will still accept donations, and I encourage people to make donations; one of the topics I'm interested in is how to use such donations to best effect.

Open questions 1. Who does evangelism for what is indeed somewhat of an open question, one that we can and should discuss going forward. As an initial statement, clearly product marketing (in the traditional sense) for Firefox and Thunderbird should be coordinated by the Mozilla Corporation, and it might make sense to have initiatives like SpreadFirefox (i.e., that are tied directly to Firefox and/or Thunderbird) also be coordinated by the Mozilla Corporation. On the other hand, for products that are not directly handled by the Mozilla Corporation (for example, Camino, to pick one at random), it might make sense for the Mozilla Foundation to coordinate evangelism efforts, in cooperation with the international affiliates where appropriate.

In these latter cases I'd expect the actual evangelism itself to be done mainly by volunteers, with the Mozilla Foundation and/or its affiliates providing oversight, coordination, and support where it makes sense to do so. (This is one place where donations could likely be put to good use.)

Open questions 2. I'm not totally sure what you're asking, but I'm guessing that you're talking about things like project infrastructure. In practice there are a number of activities related to the project's technical infrastructure (e.g., maintaining build machines, Bugzilla, the CVS servers, and so on) which by their nature might be carried out either by the Foundation or the Mozilla Corporation. We've decided that most if not all of these "in-between" activities are best carried out by the Corporation and not the Foundation. In particular, the process of building and distributing end user products puts the most stress on the technical infrastructure, and the Mozilla Corporation is the one single organization most dependent on that infrastructure working well; we therefore believe that it makes the most sense for the Mozilla Corporation to maintain that technical infrastructure on behalf of the Mozilla Foundation and the project community at large. (For example, why have two sysadmins, one for the Foundation and one for the Corporation, with both doing pretty much the same things?) However the Mozilla Foundation and its board would still retain oversight and ultimate control over the project infrastructure.

Open questions 3. Right now it's not clear to me exactly how many people need to work for the Mozilla Foundation proper (i.e., excluding people who work for the Mozilla Corporation). I think the best way to approach this question is to first determine what the Foundation absolutely needs to do itself (as opposed to things that can be done by the Mozilla Corporation or by others, including volunteers and the international affiliates), and then figure out how many people we need at the Foundation itself for those tasks.

In particular I'd like us to work with Mozilla Europe and other international affiliates to figure out how to best share the work. The Foundation cannot and should not try to do everything itself.

Only one question: what revenue? Last time I checked there was a bunch of free software products and a small scale webshop. The rest is tax deductable donations and corporate sponsoring (directly and indirectly through hiring people).

I recommend researching other organizational structures, such as those implemented at Visa and other organizations. The interesting thing about a chaordic organization is that there are no templates or easy answers, but it seems like you are running up against the same issues that drove those in the banking industry to propose the structure for Visa that they did.

Another possible model: The National Geographic Society. Let me assure you that the non-taxable (as Hecker notes, the more appropriate term for a "non-profit") side of this entity brings in a LOT of money -- so the raw amount of money coming in likely isn't an issue. The NGS also does lots of revenue transfer between taxable entities it has created via licensing fees for trademarks and content.

Seems to me that the first thing the Feds need to do is look at how, when and where donations were spent. If this for-profit corp is taking over the assets of a non-profit (more properly called a not-for-profit, btw), then it seems possible, even likely, that backward-looking taxes can be levied against all income received since 2003.

Seems like all the good software is selling out. 2005 will be remembered as the year of the SELLOUT. If it's all about the money, then I'm back to using Maxthon/IE. As others have noted, it was good while it lasted, but some jackass always has to screw it up.